5 Things You Should Know About Personal Finance

Money. Oh money. It makes the world go ’round. It’s one of the biggest reasons for divorce. It either frees us or enslaves us. It is the commodity of all commodities. And yet, as much as many of us make, most of us know so little about how it works. I blame our parents. They should have known. They should have taught us. Well, either way, I’m about to give you a quick crash course in cash money 101, and how personal finances should work. Buckle up and enjoy the ride. Hopefully you’ll be enlightened.

1. How a credit card works

Credit cards are an interesting commodity. They can either work for you or against you, depending on how much you know about them and how smart you are with them. The biggest problem with credit cards, though, is that we gain access to them before we know enough about them. Your parents should have taught you how they work, but sadly, many adults don’t even know exactly how they work. This article should help. Read it. Then read it again.

Advertising

2. How to create a budget

Budgeting is something that people either love or hate to do. Personally I hate it. But I keep a general budget because it’s important to know where my money is going. A friend of mine knows where every dollar he spends goes. I’d rather divide my money into 2 different accounts, business and pleasure. I give myself an “allowance” to do whatever I want with monthly, and the rest stays in my “business” account for bills and other living expenses. Need a crash course on building a budget? Check this out.

3. The time value of money

The time value of money is a simple principal to understand: basically it states that any amount of money is worth more today than the same amount of money in the future due to it’s earning potential. This means that if you have $100 to invest today, it’s worth more than $100 a year from now, because it could be gaining value through investments for a year. Let’s assume you average 9% on your investments… Your $100 today will be worth $109 in a year, whereas getting $100 a year from now is only worth about $91, due to the value of money lost in the year.

This is very important when you consider the next point…

Advertising

4. Start investing early

Take a look at this chart. Basically what it states is that when Saver B starts investing earlier on in life, the time value of his money allows for gaining potential so much greater that even though Saver A invested more than 4 times the amount of Saver B, Saver B has gained more than $400k more than Saver A by retirement.

Moral of the story? If you start investing now, you’ll have much more than if you wait till you make more money, even if you invested more in the years to come.

5. Let your money work for you

We were all taught that it is important to gain a good education and to learn valuable skills to enter the job force and start a good career. But here’s what few of us have learned: more important than having a good job is learning how to make your money work for you. Consider this: if you can save $500k, and you average 10% on your investment portfolio, you will gain $50k annually without doing anything other than having the money. $2 million will earn you $200k per year (earning 10%). $10 million will earn $1 million per year. The more you invest, the more you’ll make, without lifting a finger (well, other than managing your money, of course).

Advertising

Sure it’s important to have a good job. But it’s even more important to be investing your money, no matter how much you’re making. If the goal is financial security and freedom, it doesn’t take rocket science; just a little discipline and sacrifice early on. And what you’ll gain is so much more than what you could buy today.

One last note: $1 at age 18 can’t get you more than a coke, or maybe a dollar menu burger. But $1 at age 18 is worth $54 at age 60 (assuming 10% again). Keep that in mind the next time you stop at Starbucks. Your cup of joe is actually taking more than $150 out of your retirement fund.

How to Motivate Yourself: 13 Simple Ways You Can Try Right Now

Who needs Tony Robbins when you can motivate yourself? Overcoming the emotional hurdle to get stuff done when you’d rather sit on the couch isn’t always easy. But unless calling in sick and waking up at noon have no consequences for you, it’s often a must.

For those of you who never procrastinate, distract yourself or drag your feet when you should be doing something important, well done so far! But for the rest of you, it’s good to have a library of motivational boosters to move along.

Whether you’re starting a buisiness, trying to los weight or breaking a bad habit, you’ll learn how to motivate yourself with different techniques in this article.

13. Build on success

Success creates success. When you’ve just won, it is easy to feel motivated about almost anything. Emotions tend not to be situation specific, so a small win, whether it is a compliment from a colleague or finishing two thirds of your tasks before noon can turn you into a juggernaut.

There are many ways you can place small successes earlier on to spur motivation later. Structuring your to-do lists, placing straightforward tasks such as exercising early in the day or giving yourself an affirmation can do the trick.

How to Stay Motivated Forever (Without Motivation Tricks)

The best way to motivate yourself is to organize your life so you don’t have to. If work is a constant battle for you, perhaps it is time to start thinking about a new job. The idea is that explicit motivational techniques should be a backup, not your regular routine.

Here are some other things to consider making work flow more naturally:

Passion

Do things you have a passion for. We all have to do things we don’t want to. But if life has become a chronic source of dull chores, you’ve got a big problem that needs fixing.

Not sure what your passion is to get you motivated? This will help you: